Condo associations ramp up foreclosures on delinquents

Just because you've been making your mortgage payments doesn't mean you're in the clear on your house. If you live in a condominium and fall behind on home owner's association dues, your neighbors have the right to foreclose on your property.

That reality is almost always written into the purchase contract: When you buy a home in an HOA, you agree to abide by the rules -- one of the most important of which is paying the monthly dues.

Without the threat of foreclosure, HOA dues would be optional, leaving homeowners who do pay with the responsibility for covering their neighbors' share of common charges like water, insurance, landscaping, and maintenance.

The Associated Press reports that HOA-induced foreclosures are rising across the country as job losses continue and home owners are forced to choose between their mortgages and their dues.

But if you're a strapped condo owner, there's a bit of good news. It's a cliche that banks don't want your house and would rather work with you to help you keep it, but the home owner's association really doesn't want it.

Foreclosures depress property values. Just to spitball some numbers, let's say you're $5,000 behind on your dues and there are 100 units in your complex. If your foreclosure would lead to a $2,000 decline in the value of each of your neighbor's units, that's a fate they're going to want to avoid.

So it's always worth talking to your HOA board at the first sign of trouble and working out a payment plan that allows you to keep your unit and gets them paid at some point. It's better for everyone that way, and foreclosing on a home to recoup a few thousand dollars when the foreclosure costs every unit owner thousands in equity is just bad business.